3 small cap ASX shares to watch

These small caps could be worth watching…

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At the small end of the Australian share market, there are a number of companies with the potential to grow materially in the future.

Three that investors may want to get better acquainted with are listed below. Here’s what you need to know about them:

Adore Beauty Group Ltd (ASX: ABY)

The first small cap to watch is Adore Beauty. It is Australia’s leading online beauty retailer with 874,000 active customers. Adore Beauty appears well-positioned over the next decade thanks to its very long runway for growth. This is due to its large market opportunity and the relatively low penetration of online beauty sales relative to other Western markets and categories. Morgan Stanley has an overweight rating and $6.00 price target on its shares. It believes the company can grow strongly over the medium term thanks to its strong market position and the migration to online shopping.

Alcidion Group Ltd (ASX: ALC)

Another small cap ASX share to watch is this growing informatics solutions company. It is the company behind innovative healthcare software products including Miya, Patientrack and Smartpage. The Patientrack product, for example, helps clinicians know a patient’s status in real-time. It uses predictive algorithms to support time-critical care, allowing doctors to intervene and prevent patient deterioration faster than ever before. Demand has been growing strongly for its offering, underpinning strong revenue growth. The team at Bell Potter expect this to continue. So much so, the broker recently put a buy rating and 45 cents price target on the company’s shares.

BlueBet Holdings Ltd (ASX: BBT)

A final small cap ASX share to watch is BlueBet. It is an online sports betting company that has been growing very strongly. This is being driven by the increasing popularity of mobile sports betting, which is driving strong customer growth. The good news is that management is confident that this trend can continue. It also believes it is well positioned to substantially grow its current share of the market in Australia, and has its eyes on the enormous US market. Morgans currently has an add rating and $2.57 price target on the company’s shares.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and has recommended Alcidion Group Ltd. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended Adore Beauty Group Limited. The Motley Fool Australia has recommended Alcidion Group Ltd and BlueBet Holdings Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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